A Multiple Ideal Point Model: Capturing Multiple Preference Effects from within an Ideal Point Framework

Abstract

Previous research has suggested that households and individuals may possess multiple preferences for a given product category. These multiple preferences may be the result of multiple individuals, different uses and usage occasions, and/or variety seeking. As such, single ideal point models that assume a single invariant ideal point may be operating from a false and misleading assumption. We propose a Multiple Ideal Point Model to capture these multiple preference effects. The basic premise of the model is that consumers may possess a set of ideal points, each of which represents a distinct preference. At any given purchase occasion, one of these points is "activated" with some probability and choices are made with respect to its characteristics. In this paper, the Multiple Ideal Point Model and an associated estimation procedure are assessed with respect to its ability to recover a true choice structure. We then empirically test the model on IRI panel data from the powdered soft drink category. The results are discussed and directions for future research are introduced.

Keywords: Multidimensional Scaling, Variety Seeking, Inertia

JEL Classification: C23, D12